Marijuana is one of the most exciting emerging industries for investors right now, but a lot of that excitement could be misplaced. The potential to profit from marijuana stocks will depend significantly upon cooperative governments and willing consumers, and not everyone is convinced that marijuana stocks are going to get much bigger than they are now.

In this clip from The Motley Fool’s Industry Focus: Healthcare, analyst Shannon Jones is joined by Todd Campbell, Sean Williams, and Keith Speights to discuss if the excitement surrounding marijuana stocks like Tilray (NASDAQ: TLRY) is warranted or overblown.

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A full transcript follows the video.

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Shannon Jones: Let’s dive right in. I want to lay the groundwork here. Oftentimes here at The Fool, one of the most frequently asked questions that we get when it comes to the marijuana industry is, “Is this really legit? Is this a legit industry? Is this just the sketchy corner dispensary down the street? Are there really some legs to this industry?” What can you guys tell us about what the marijuana industry is all about, what it’s made up of? What can you give the listeners?

Todd Campbell: Anyone want to jump in? Keith?

Keith Speights: I can jump in, and you guys can jump in after me. Yeah, it is legitimate. Obviously, there are some sketchy players out there. You have to be aware. But it’s very legitimate. I think that thing everyone needs to realize, we’re really talking about two different markets here. You’ve got the medical marijuana market, and you’ve got the recreational marijuana market. They’re quite different. Obviously, medical marijuana has been legal in several countries already. It’s been legal in Canada for a while, it’s been legal in quite a few states. I think we’re up to 30 states now, plus D.C. Then, on the recreational side, in the U.S., you’ve got nine states now that have legalized it. I think Michigan is voting in November.

Sean Williams: Two states voting.

Speights: Two states voting. Michigan is one of the big ones. The latest I saw, the polls look like it’s probably going to pass. So, we’re going to have more states. Of course, the other thing to remember is that it’s still illegal at the federal level in the U.S.

The other aspect I think you have to look at is that there are different geographies involved. All the hype right now is Canada. Canada is a big market. You just mentioned, Shannon, the market for recreational marijuana opens up in just a few days. Everybody’s anxious to see how that’s going to turn out. But they’ve had medical marijuana legal for several years now. You’ve got Germany that legalized medical marijuana last year. That’s a very big market. They’re the largest population in the European Union, so that’s an important market.

We can’t leave out the good ol’ U.S.A. The U.S. currently, from the latest information I saw, accounts for 85% of total marijuana sales in the world.

Right? Everybody’s talking about Canada. The U.S. is where it’s at, even though it’s still illegal at the federal level. Obviously, Germany’s going to grow, Europe’s going to grow, Canada’s going to grow, but even in a few years from now, the U.S. is still going to account for probably three-quarters of all marijuana sales. You have to look at all of this. When you see all the Canadian stocks getting all the hype, the bigger market is right here at home.

Campbell: And really, the Canadian market is pretty small fish in the big sea. Even with medical marijuana having been around in Canada available, you’re still not talking about a ton in sales. Maybe a billion is what they’re predicting for 2019. Totally combined, including recreational, maybe you get $5 billion to $7 billion or something like that. The global marijuana market is $150 billion if you include, of course, the black market. So, yeah, there’s a major chance to disrupt. I agree with you, Keith. I think this is a real industry. There’s a lot of disruption going on here.

If you are a listener that’s new to the whole marijuana thing — what the heck is this whole marijuana thing about? Just a little bit of background. We’re talking about cannabis, cannabis sativa is the plant. You may be familiar with hemp, which is a type of cannabis sativa. Hemp has been used industrially for about 7,000 years. As a matter of fact, it was a major ingredient for things like rope and paper and everything back in the colonial times. As a matter of fact, you used to be able to pay your tax bill, Sean, you used to be able to pay it in cannabis seeds, which is cool. You could go into your local government and pay your taxes —

Speights: Didn’t George Washington grow hemp?

Campbell: And Thomas Jefferson set aside some of the best land he had to grow hemp!

Williams: I’m going to see what my state says about that.

Campbell: [laughs] Yeah, today, probably not so much. Not so much. But, what we’re talking about with marijuana is the female plant. We’re talking about the bud of the female plant. That’s the dried flower that people think of when they’re talking about the commodity part of the marijuana business. I’m sure that we’ll chat a little bit about the differences between commodities and not. You are going to have two very distinct markets. That’s going to be the commodity — I’m growing, say, tobacco, or I’m growing wheat, or I’m growing whatever it is I’m growing. And then, you’re going to have the finished good market, or the value-add market, however you want to refer to it. Those are going to be the things like cannabis oils, CBD, and those kinds of things. Then, to your point, Keith, you have this whole separate market, which could be, theoretically, very large, in the medical marijuana space. Most likely, we’re talking about prescription medical marijuana.

Keith Speights has no position in any of the stocks mentioned. Shannon Jones has no position in any of the stocks mentioned. Todd Campbell has no position in any of the stocks mentioned. Sean Williams has no position in any of the stocks mentioned.The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.